Project Background: Preventable hospitalizations are considered a reflection of lack of access to timely primary care and fragmented care. Similar to other settings, observed patterns in VHA suggest that healthcare expenditures and quality are not closely related. For example, substantial geographic variations in preventable hospitalizations are documented in Veterans with diabetes using the VHA despite near universal access to VHA primary care providers. At the same time, marked geographic variations in per patient VHA expenditures have been documented by the Congressional Budget Office. One factor possibly contributing to the disconnect between VHA expenditures and quality of care (as reflected by preventable hospitalizations) is the use of healthcare services outside the VHA, or dual-system use. For elderly Veterans, dual VHA/Medicare use can either expand access to care (supplementation) or complicate management (fragmentation). At the same time, better care coordination (an organizational construct reflecting processes and structures designed to guide the totality of a patient's care) may promote better outcomes by ameliorating the negative impact of fragmented care. VHA is implementing the Patient Aligned Care Team (PACT) model and other systemic changes to improve care coordination. The proposed project will evaluate geographic variations in healthcare expenditures and preventable hospitalizations in VHA users with diabetes to better understand the relationship between resource allocation and quality of care in VHA. The proposed study will conduct a rigorous examination of known variations in preventable hospitalizations and healthcare expenditures. With a focus on dual VHA/Medicare use and care fragmentation and coordination, findings will inform the evaluation of ongoing healthcare delivery initiatives in the context of Veteran choice and the Affordable Care Act. Project Objectives: Our specific aims are: 1. Among veteran clinic users with diabetes, examine the role of fragmented care at the veteran level and care coordination at the facility-level on the risk of preventable hospitalizations; 2. Among veteran clinic users with diabetes, analyze veteran-level and facility-level factors associated with the relationship between preventable hospitalizations and healthcare expenditures; 3. Develop prototype user-friendly maps of geographic variation in healthcare expenditures, dual VHA/Medicare use, and preventable hospitalizations among VHA users with diabetes. Project Methods: We will retrospectively study geographic variations in preventable hospitalizations and healthcare expenditures among VHA users with diabetes enrolled in both VHA and Medicare using merged VHA and Medicare data. Focusing on the concepts of fragmentation of care and care coordination, we will use multi-level modeling to identify the extent to which patient-level and facility-level factors contribute to preventable hospitalizations. We will also examine the relationship between preventable hospitalizations and healthcare expenditures using sophisticated risk adjustment and statistical modeling. Finally, we will develop maps to illustrate geographic variations in healthcare expenditures, dual VHA/Medicare use, and preventable hospitalizations to promote dissemination of the findings to inform healthcare policy and management decisions.